sgm p.r. shukla. second generation model top-down economic models project baseline carbon emissions...

SGM

P.R. Shukla

Second Generation Model

Top-Down Economic Models

Project baseline carbon emissions over time for a country or group of countries

Find the least-cost way to meet any particular emissions constraint

Provide a measure of the carbon price, in dollars per metric ton

Provide some measure of the overall cost of meeting an emissions target

Key SGM Characteristics

Computable General Equilibrium 12 Global Regions (Developed in

International Collaborations) Multiple Greenhouse Gases Internally Generated Demographics Vintaged Capital Stocks Explicit Energy Technology Land Resource Constraints

SGM 2000: Structure and Sectors

AGRICULTUREgrains and oil seeds

animal productsforestry

food processingother agricultural services

HOUSEHOLDSdemographics

labor supplyENERGY land supply

oil production household savingsPRIMARY FACTORS gas production final product demands

OF PRODUCTION petroleum refiningland surface gas distribution

subsurface resources coke and coal productslabor biomass production

capital uranium productionhydro and solar electric power GOVERNMENT

electricity production general governmentnational defense

education

EVERYTHING ELSEpaper and pulp manufacture

chemical manufacturecement manufacture

primary iron and steelprimary non-ferrous metals

other manufacturingpassenger transport

freight stransportother services

Computable General Equilibrium

Based on Economic Principles. All economic activities are included in

some sector of the model. Market equilibrium -- ALL markets must

clear simultaneously. Maximization Behavior -- consumers,

utility; producers, net worth.

SGM Regions

Annex IUnited StatesCanadaWestern EuropeJapanAustraliaFormer Soviet UnionEastern Europe

Non Annex IChinaIndiaMiddle EastMexicoSouth KoreaRest of World

Multiple Greenhouse Gases

CO2

CH4

CO N2O

NOx SOx NMHC

Internal Demographics

Age structure & gender of the population is developed internally using: fertility rates survival rates net migration rates

Labor force participation rates can be age & gender specific.

SGM Inputs & Outputs

Factors of Production Capital, Labor, Land,

Agriculture, Energy, & Materials.

Model Outputs Agriculture,

Energy, Materials,

Savings, Consumption &

GDP.

Energy Focus

8 Energy Sectors Resources and Reserves of Energy Resources

Vintaged Energy Using Technologies

SGM Is Part of GCAM

SGM is part of the Global Change Assessment Modeling (GCAM) System, an integrated assessment model computes concentrations of greenhouse bases

such as CO2,

can compute T and sea level rise.

Production Decisions

Production occurs out of existing capacity and its vintage limited by previous investments, & then current technologies

Retirement of old capacity occurs when Cannot cover operating expenses Old age -- fixed life, or Policy -- forced retirement

Production Functions

Technical coefficients control change in input-output ratios over time.

Energy coefficient is similar to AEEI (Autonomous Energy Efficiency Improvement).

),,,;,,,( MtEtLtKtttttt aaaaMELKfQ

New Capacity

Investment is based on expected profitability. available technology price expectations, & policy expectations

Price & Policy Expectations can be either forward or backward looking.

Investment

Capital market balances supply and demand of loanable funds.

Investment resources distributed among investments with positive expected net profitability no resources flow to expected losers the higher the expected rate of return, the greater

the share of the investment pool

Energy Production

Energy production out of reserves. Additions to reserves from the resource

base. additions depend on expected profitability resource availability.

Energy Technology

Hierarchical model. sectors, sub-sectors, & technologies.

Explicit energy technologies can be introduced into the model. e.g. natural gas combined cycle turbines

for power generation.

Issues the SGM Can Address

Assessing impacts of greenhouse gas emissions mitigation policies on GDP, consumption and energy.

Value of emissions rights trading. Value of “when” flexibility. Relative costs and benefits to regions of the

world of alternative protocol formulations.

SGM Strengths Built specifically for climate policy analysis. Multiple greenhouse gases. Part of an Integrated Assessment model --

e.g. can compute CO2 concentrations or T.

General equilibrium -- all markets clear. Detailed energy supply sector. Can be run in alternative foresight modes. Internal demographics. International Collaborations.

SGM Limitations

Not a business cycle model -- does not estimate inflation or unemployment policy impacts.

Limited energy end-use detail. Provides no sub-national

disaggregation for the United States.

SGM Data Requirements

Original Data Derived Data for SGM

1990 Input-Output Table

1990 Energy Balances

Hybrid Input-Output Table

Annual Investment Data by Sector Capital Stocks by Sector

Data on Fossil Fuel Resources Resource Grades

Electricity Supply: generation, installed

capacity, energy consumption, capital costs,

operating costs

Input-output representation of

electricity generation by fuel

National Income Accounts tax rates, savings rates

international trade

Bottom-UpEnergy Technology

EcosystemImpacts

Top-Down Economic Model (integration tool)

Region A Region B

Climate Scenarios

Model Integration

India Results

Real GNP and components

0

1000

2000

3000

4000

5000

6000

1990 1995 2000 2005 2010 2015 2020 2025 2030

Rs

. Th

ou

sa

nd

Cr.

(1

99

0 P

ric

es

)

Real GNP C I G

Reference Scenario

Energy Consumption

0

5

10

15

20

25

30

35

40

45

1990 1995 2000 2005 2010 2015 2020 2025 2030

Ex

ajo

ule

s

C.Oil N.Gas Coal Nuclear Hydro Solar

Reference Scenario

Electricity by sub-sector

0

1

2

3

4

5

6

1990 1995 2000 2005 2010 2015 2020 2025 2030

Ex

ajo

ule

s

Coal Gas Oil Nuclear Hydro Solar

Reference Scenario

CO2 Emissions

Reference Scenario

0100200300400500600700800900

1000

1990 1995 2000 2005 2010 2015 2020 2025 2030

Te

rag

ram

s c

arb

on

Base

Policy scenarios

Alternate growth scenariosLow 5%High 7%

Alternate tax scenariosFixed tax: $25, $50, $100 per tCIncreasing tax

Policy scenarios

Advanced technology scenariosHigh SolarMedium Solar with $5 taxMedium Solar with $25 tax

Real GNP

0

1000

2000

3000

4000

5000

6000

7000

8000

1990 1995 2000 2005 2010 2015 2020 2025 2030

Rs.

Tho

usa

nd C

rore

(19

90 p

rice

s)

Base High Growth Low Growth

0

1000

2000

3000

4000

5000

6000

7000

8000

1990 1995 2000 2005 2010 2015 2020 2025 2030

Rs.

Tho

usa

nd C

rore

(19

90 p

rice

s)


Energy consumption

0

10

20

30

40

50

1990 1995 2000 2005 2010 2015 2020 2025 2030

Exa

jou

les


0

10

20

30

40

50

1990 1995 2000 2005 2010 2015 2020 2025 2030

Exa

jou

les


Energy Mix: Low Growth

0

5

10

15

20

25

30

35

40

1990 1995 2000 2005 2010 2015 2020 2025 2030

Exa

jou

les


0

5

10

15

20

25

30

35

40

1990 1995 2000 2005 2010 2015 2020 2025 2030

Exa

jou

les


Energy Mix: High Growth

0

10

20

30

40

50

1990 1995 2000 2005 2010 2015 2020 2025 2030

Exa

jou

les


0

10

20

30

40

50

1990 1995 2000 2005 2010 2015 2020 2025 2030

Exa

jou

les


ResultsTax Scenarios

Energy Consumption

0

5

10

15

20

25

30

35

40

45

1990 1995 2000 2005 2010 2015 2020 2025 2030

Ex

ajo

ule

s

Base $25 Tax $50 Tax $100 Tax

Tax Scenarios

Energy Consumption: Fuel-wise

OIL

0

2

4

6

8

10

12

14

16

1990 1995 2000 2005 2010 2015 2020 2025 2030

GAS

0

1

2

3

4

5

6

7

1990 1995 2000 2005 2010 2015 2020 2025 2030

COAL

0

2

4

6

8

10

12

14

16

18

20

1990 1995 2000 2005 2010 2015 2020 2025 2030

NUCLEAR

0

0.2

0.4

0.6

0.8

1

1.2

1.4

1.6

1.8

2

1990 1995 2000 2005 2010 2015 2020 2025 2030

HYDRO

0

0.5

1

1.5

2

2.5

1990 1995 2000 2005 2010 2015 2020 2025 2030


SOLAR

0

0.1

0.2

0.3

0.4

0.5

0.6

1990 1995 2000 2005 2010 2015 2020 2025 2030

Tax Scenarios

Compare Ref.

Energy Consumption: $100 Tax

0

5

10

15

20

25

30

1990 1995 2000 2005 2010 2015 2020 2025 2030


0

100200300400500600700800900

1000

1990 1995 2000 2005 2010 2015 2020 2025 2030

Terg

ram

s ca

rbo

n


CO2 Emissions

Tax Scenarios

Change in GNP over base case

-3.50%

-3.00%

-2.50%

-2.00%

-1.50%

-1.00%

-0.50%

0.00%

1990 1995 2000 2005 2010 2015 2020 2025 2030

Tax Scenarios

-3.50%

-3.00%

-2.50%

-2.00%

-1.50%

-1.00%

-0.50%

0.00%

1990 1995 2000 2005 2010 2015 2020 2025 2030


Tax Scenarios

0

5

10

15

20

25


BtC

CO2 Emissions: Cumulative

Tax Scenarios

ResultsAdvance Technology Scenarios

0100200300400500600700800900

1000

1990 1995 2000 2005 2010 2015 2020 2025 2030

Terg

ram

s ca

rbo

n

Base $25 Tax High SolarMed Solar + $5 Tax Med Solar + $25 Tax

CO2 Emissions

0

5

10

15

20

25

Base High Solar Med Solar + $5Tax

Med Solar +$25 Tax

BtCCO2 Emissions

Solar in Electricity

0%

2%

4%

6%

8%

10%

12%

14%

16%

18%

1990 1995 2000 2005 2010 2015 2020 2025 2030

Base High Solar$25 Tax Med Solar + $5 TaxMed Solar + $25 Tax


-0.8%

-0.6%

-0.4%

-0.2%

0.0%

0.2%

0.4%

0.6%

0.8%

1990 1995 2000 2005 2010 2015 2020 2025 2030

High Solar $25 Tax

Med Solar + $5 Tax Med Solar + $25 Tax

-20

-15

-10

-5

0

5

10

15

20

25

30

35

1990 1995 2000 2005 2010 2015 2020 2025 2030Rs.

Th

ou

san

d C

r.

High Solar $25 Tax

Med Solar + $5 Tax Med Solar + $25 Tax


sgm p.r. shukla. second generation model top-down economic models project baseline carbon emissions...

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